Arbitration in the Supreme Court

The Supreme Court has laid down new precedents regarding how arbitration is handled in court. Arbitration is an important legal process which effects consumers, businesses, employers, and employees. In Smith, the court held in a unanimous decision “that when a federal court finds that a dispute is subject to arbitration and a party has requested a stay of the court proceeding pending arbitration, the FAA compels the court to stay the proceeding.” Smith v. Spizzirri, 601 U.S. 472, 144 S. Ct. 1173, 218 L. Ed. 2d 494 (2024). This ruling overrules previous precedent that has been in force in the Ninth Circuit since 1988, that was established in Sparling. Sparling v. Hoffman Const. Co., 864 F.2d 635 (9th Cir. 1988), abrogated by Smith v. Spizzirri, 601 U.S. 472, 144 S. Ct. 1173, 218 L. Ed. 2d 494 (2024). This means that if there is a suit occurring in a federal court and the court has established that the matter is subject to arbitration, that if a party requests a stay on the federal court proceedings until the arbitration is finished, the FAA requires the court to cease its proceedings until the arbitration has finished. This means that the federal courts can no longer make decisions regarding the arbitration while the arbitration is occurring, which could effect the nature and validity of the arbitration. This grants individuals desiring arbitration more power, while disempowering individuals who are against arbitration.

Additionally, in Coinbase, the Supreme Court held that “where parties have agreed to two contracts—one sending arbitrability disputes to arbitration, and the other either explicitly or implicitly sending arbitrability disputes to the courts—a court must decide which contract governs.” Coinbase, Inc. v. Suski, 144 S. Ct. 1186, 1189, 218 L. Ed. 2d 615 (2024). This allows the courts more latitude in determining which contract is binding, and whether the arbitration agreement is valid. This empowers individuals who are against arbitration, while disempowering individuals who are in favor of arbitration.

These cases, taken together, represent the court’s attempts at consolidating and unifying rules governing arbitration. Arbitration has only become popular in the last few decades, which created diverse and contradictory rules for arbitration across different circuits. These cases, alongside others, show the court attempting to consolidate. Additionally, many of these cases are unanimous, indicating that these decisions lack politically motivated bias.